Notify Option to Tax Land and Buildings within 30 days of decision

Supplies of land and buildings, such as freehold sales, leasing or renting out the property, are normally exempt from VAT. This means that no VAT is payable, but the person making the supply cannot normally recover any of the VAT incurred on property expenses.

However, it is possible to waive the exemption, or “opt to tax” the land. For the purposes of VAT, the term ‘land’ includes any buildings or structures permanently affixed to it. You do not need to own the land in order to opt to tax. Once you have opted to tax all the supplies you make of your interest in the land or buildings will normally be standard-rated, and you will normally be able to recover any VAT you incur in making those supplies. See updated HMRC Notice 742a for details:

https://www.gov.uk/guidance/opting-to-tax-land-and-buildings-notice-742a

If you are notifying HMRC of a decision to opt to tax land and buildings, you are normally required to notify HMRC within 30 days by either:

  • printing and sending them the notification, signed by an authorised person within the business
  • emailing a scanned copy of the signed notification

The 30 day deadline was temporarily extended to 90 days to help businesses and agents during the pandemic. That temporary extension has now ended so for decisions made from 1 August 2021 onwards, you must notify HMRC within 30 days.

See: Changes to notifying an option to tax land and buildings during coronavirus (COVID-19) – GOV.UK (www.gov.uk)

For more information and to discuss your tax affairs in further detail, contact Fiona Cross or your usual Beavis Morgan Partner.